US economic growth has continued to defy expectations, surging ahead at an annual rate of 5.5% in the third quarter.

The US Commerce Department said the rise was powered by consumer spending and improvements in US trade performance.

The rate was revised upwards from a previously estimated 4.8%.

Wall Street analysts had predicted a revised growth rate of 5% for the July-to-September period.

It was the fastest pace of growth in gross domestic product since the second quarter of 1998 when the rate stood at 5.9%.

Growth was a much lower 1.9% in the second quarter of this year.

Last week, the Federal Reserve raised interest rates for a third time this year to slow down the economy and keep inflation under control.

But policy-makers signalled that rates may not have to go up any more this year.

"The econony really was booming in the third quarter and although inflation pressures started to creep, the econony is expected to slow in the fourth quarter," said Paul Kasriel, economist with The Northern Trust Co.

"The real question is whether the economy will slow enough on its own to alleviate those inflation pressures. Many economists think it won't and will need
help from the Fed."

Inflation under control

Inflation, as measured by the GDP price index, rose 1.1% in the third quarter, down from the previous estimate of a 1.6%.

The Commerce Department said gains in the trade sector, inventories and consumer spending for services were partially offset by a downward revision to investment in equipment and software.

Imports rose by a revised 14.6% in the third quarter, down from the initial estimate of 17.2%.

Exports rose by a revised 11.7% in the third quarter compared with the previous estimate of 12.4%.

Consumer spending on services rose a revised 4.5% in the third quarter rather than an initially estimated 4.1%.

A second and final revision to third quarter growth will be published on 22 December.